5 Habits That Can Hurt Your Credit Score

Most consumers do not spend much of their time thinking about their credit history. As long as one is punctual in paying their bills, they think that their credit score as well as their credit history is always clean and shiny. This is not always the case since many habits of the consumers may contribute to a low credit score to the consumer. Here are things that you should always keep in mind to ensure that you always have a clean and a high credit score.

Credit consolidation is one of the financial tools used especially by banks whereby they take either some or all of their old debts and then put it in a new consolidation loan. By doing this, the aim of this important tool is to make the monthly payment as low as possible. The other aim of this strategy is to refinance the debt one has incurred and put it at a much lower interest rate. This is always a mistake since it is always hard for you to pay old debts.

Debt shopping is another dangerous habit. This is because everyone wants a favorable rate as possible on car loans, mortgages as well as credit cards. Almost all of the financial institutions considering lending one a loan will have to look into the credit worthiness of a person. If you have been doing the debt shopping and pay the debts timely, then your credit worthiness is expected to be high and the financial institutions will not deny you to have their loan. This is because your credit scores seen to be high. However, it is always a mistake to avoid paying the debts since the credit score will go low. The financial institutions will not consider lending you money.

Refusing to pay is also a mistake that can affect your credit score. When you refuse to pay a debt, a conflict elapses between you and the creditor or the vendor. Most vendors are seen to follow up your credit score and rate it lower after you refused to pay your debt. You are advised to ensure that you pay your debts in time to avoid such conflicts that will always lead to low credit score rating.

Closing your credit cards is another mistake you can do. A credit card shows your credit worthiness. Even if the credit card is not in use anymore, it has a very big impact on your credit worthiness. It will show how previous debts have been paid thereby making your credit score as high as possible.